A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
1: Getting
started
2: First steps 3: Business
planning
4: Legal and
governance
5: Funding
and
resourcing
6: Financial
controls
7: Managing
growth
8: Management
and
governance
9: Social
enterprise
10: Sources
of support
7.7 Gift Aid on donations from individuals and on donations
to charity shops
Gift Aid allows charities to reclaim from HM Revenue & Customs
(HMRC) the basic rate of income tax on donations made by UK
taxpayers. As the current basic rate of income tax is 20 per cent,
this means that you can claim an extra 25p for every £1 you
are given. All the donor has to do is make a Gift Aid declaration
stating that they have paid enough tax to cover that which the
charity is going to recover.
Higher rate and highest rate taxpaying donors can reclaim the
difference between the basic rate that the charity claims and
higher rate tax they pay. Research by CAF (2009) found that half
of all higher rate taxpayers are not aware of the personal relief on
donations available to them, one fifth only have used it, and most
are willing to redirect the personal relief to charity.
Before you can make a Gift Aid claim you need to be recognised
by HMRC as a charity for tax purposes. Recognition by HMRC as
a charity is a separate process from registering with the Charity
Commission for charitable status.
You can claim Gift Aid on gifts of money from individuals.
• A gift of money is a voluntary donation for which the donor
receives little or no benefit or reward
• Money can take the form of cash, cheques, direct debit or
standing order payments, credit or debit card payments,
telegraphic transfers or postal orders.
Additionally, some payments to charities are treated as donations
for Gift Aid even though they are not strictly defined as gifts:
• Membership subscriptions paid to charities are treated as
donations as long as the payment is for membership only and
does not give the donor personal use of the charity’s facilities or
services.
• Admission charges to view a charity’s property can be treated
as donations if the payment gives the donor and their family
annual admission to view the property, or if a donation of at
least 10% more than the standard cost of admission is made.
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